On Wednesday (7 February), Mr Leong Mun Wai, Non-constituency Member of Parliament from the Progress Singapore Party (PSP) initiated a robust debate with a motion calling for the government to reassess its budget and reserve accumulation policies.
The motion on Singapore’s public finances “calls on the Government to review its current budget and reserve accumulation policies in order to help present-day Singaporeans reduce their financial burdens and improve their quality of life while continuing to save for future generations of Singaporeans.”
However, Liang Eng Hwa, the People’s Action Party (PAP) Member of Parliament for Bukit Panjang SMC, proposed an amendment to the PSP’s motion.
The PAP’s amended motion read: “That this House calls on the Government to ensure its budget and reserve accumulation policies always stay physically responsible and sustainable in order to help present-day Singaporeans reduce their financial burdens and improve their quality of life while planning and providing for future generations of Singaporeans.”
Mr Liang in his speech defended the government’s practice of introducing off-budget packages to help Singaporeans and reduce financial burdens, for instance, in September 2023, the government announced a S$1.1 billion support package to provide relief.
Mr Liang recalled the additional budgets implemented during the pandemic, totalling five in one year, to support and help Singaporeans.
In light of these measures, Mr Liang called on the government to continue such efforts, urging them to persist in helping present-day Singaporeans cope with the cost of living.
He specifically mentioned the upcoming budget and emphasized the importance of doing so in a fiscally responsible and sustainable manner.
Mr Liang mentioned the Asian financial crisis during his speech. He recalled the crisis that occurred in 1997-1998, and emphasized that Singapore, despite facing challenges, managed to recover due to strong fundamentals and decisive intervention by the Monetary Authority of Singapore (MAS).
He also noted that some regional currencies, such as the Indonesian rupiah and Malaysian ringgit, never fully recovered to their pre-crisis levels.
Mr Liang drew a lesson from the Asian financial crisis, emphasizing the importance of ensuring that the economy is underpinned by sound fundamentals and maintaining a strong financial position.
Mr Liang underscored the importance of growing the NIRC to enhance Singapore’s future spending power and provide ongoing support to Singaporeans.
He highlighted the compounding effect of reserves, emphasizing that what is not spent gets compounded and contributes to future NIRC, ultimately benefiting present and future generations of Singaporeans.
Following Mr Liang proposed the amendment to PSP’s motion in the House, Mr Leong Mun Wai, who is also the PSP Secretary General, stood up and sought clarification from Mr Liang regarding the recovery of the Singapore dollar during the Asian financial crisis.
He inquired whether Mr Liang believed that the recovery of the Singapore dollar was due to the fact that Singapore had kept its financial reserves a secret.
In response, Mr Liang did not directly address LMW’s question, opting for a more indirect approach.
He mentioned that the recovery of the Singapore dollar was a “combination of factors,” acknowledging the significance of financial reserves as an essential consideration for speculators challenging the Central Bank.
He emphasized that the country’s economic fundamentals, stability management, and political stability also contributed to the recovery.
Mr. Liang underscored that economic fundamentals, stability management, and political stability also played a role in the recovery. Furthermore, he emphasized the crucial need for adequate reserves as the first line of defence against speculators.
He pointed out that the contrast between Singapore and other regional countries demonstrated that speculators refrained from challenging the Singapore Central Bank, recognizing its capacity to intervene and take decisive actions.
LMW Pressures Mr Liang on the need for reserve confidentiality
Pressing Mr Liang further, LMW inquired whether the PAP MP agreed that the defence of the Singapore dollar and maintaining secrecy over the reserves were distinct matters, given that MAS possesses ample resources for currency defence.
“So does he agree that we don’t need to keep the reserve secret, and yet we still can defend the Singapore dollar?”
Mr Liang responded by stating that the MAS’s credibility comes from the fact that speculators know they can only challenge up to a certain point before having to pull back.
He argued that revealing the total reserve amount might not be wise, as it could indicate a limit that speculators could exploit in future attacks.
Mr Leong further questioned whether the current official foreign reserves (OFR) held by MAS amounted to 100% of Singapore’s GDP and how many countries in the world had OFR equivalent to 100% of their GDP.
He argued that the Asian currency crisis had already proven Singapore’s credibility in managing its currency in line with economic fundamentals.
Mr Liang again reiterated the need to keep the total reserve secret, considering the unpredictable nature of speculatory attacks.
Mr Liang highlighted Singapore’s inherent vulnerabilities as a tiny island state with limited domestic resources, making it crucial to keep certain information undisclosed to deter potential attacks.
Mr Leong urging open debate on policies without dismissing opposition perspectives
Later in his concluding speech, Mr Leong reiterated the importance of disclosing reserves to Singaporeans, emphasizing their rightful ownership despite continuous pressure from the Workers’ Party (WP), PSP, and the public.
“We need to put all Singaporeans on the same page because we are all in this together.”
Discussing policies better than the current PAP offerings, Mr Leong acknowledged that PAP policies are not bad but believes there’s room for improvement.
He reiterated their proposal, asserting that it doesn’t require drawing down reserves but only a marginal slowdown in accumulation, promising superior economic outcomes for Singaporeans.
“I hope in this Chamber, we can discuss and debating to bring these policies out, and not keep saying that “whatever the opposition says, this is going to bring us down”. ”
Despite more than seven hours of debate, the PAP-dominated Parliament passed Mr Liang’s amended motion. All MPs from the WP, standing in solidarity with two PSP NCMPs, expressed their dissent over the amendment.
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